Post by Sapphire Capital on Jul 17, 2008 23:01:45 GMT 4
July 17 (Bloomberg) -- India, the world's second-largest importer of vegetable oils, should lift a ban on futures trading in soybean oil, rubber, potatoes and chickpeas as scheduled in September because the curbs have failed to ease rising food prices, the commodities market regulator said
``Futures were not responsible for the price rise before the ban and they are not responsible for it after the ban,'' Forward Markets Commission Chairman B.C. Khatua said in an interview in Mumbai. ``I don't see any reason why the ban should be pursued beyond September.'' The ban on futures trading is due to be lifted after Sept. 6.
India banned futures trading in the commodities in May after a surge in food prices helped drive inflation to the highest in more than 13 years. Prime Minister Manmohan Singh needs to tame inflation before he faces general election due by May next year.
``All the studies and analysis have proved that futures didn't really contribute to increases in prices of physical commodities,'' Khatua said. ``Therefore, there is no compelling reason to review the self-limiting order.''
India halted trading in rice and wheat futures last year and lentils in 2006 to keep food affordable for half of India's 1.1 billion people who live on less than $2 a day.
`No Evidence'
A government-appointed panel chaired by economist Abhijit Sen in April said there was no conclusive evidence to suggest futures trading contributed to price increases.
Trading of all commodities on India's 22 exchanges including the Multi Commodity Exchange of India Ltd., the world's third- biggest gold bourse, may rise to 50 trillion rupees ($1.16 trillion) in the year to March, Khatua said.
``Volatility in commodity prices will continue at least until December and that will ensure a higher turnover,'' Khatua said. The value of commodities traded rose 24 percent to 11.2 trillion rupees in the quarter ended June, he said.
The commodity exchanges traded commodities worth $922 billion in the year to March, up 11 percent from a year earlier, Khatua said. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Domestic traders, producers and consuming companies are the main participants in India's commodity exchanges, compared with the 13 million people in the country who trade stocks. Overseas funds aren't allowed to buy and sell commodity futures.
``Futures were not responsible for the price rise before the ban and they are not responsible for it after the ban,'' Forward Markets Commission Chairman B.C. Khatua said in an interview in Mumbai. ``I don't see any reason why the ban should be pursued beyond September.'' The ban on futures trading is due to be lifted after Sept. 6.
India banned futures trading in the commodities in May after a surge in food prices helped drive inflation to the highest in more than 13 years. Prime Minister Manmohan Singh needs to tame inflation before he faces general election due by May next year.
``All the studies and analysis have proved that futures didn't really contribute to increases in prices of physical commodities,'' Khatua said. ``Therefore, there is no compelling reason to review the self-limiting order.''
India halted trading in rice and wheat futures last year and lentils in 2006 to keep food affordable for half of India's 1.1 billion people who live on less than $2 a day.
`No Evidence'
A government-appointed panel chaired by economist Abhijit Sen in April said there was no conclusive evidence to suggest futures trading contributed to price increases.
Trading of all commodities on India's 22 exchanges including the Multi Commodity Exchange of India Ltd., the world's third- biggest gold bourse, may rise to 50 trillion rupees ($1.16 trillion) in the year to March, Khatua said.
``Volatility in commodity prices will continue at least until December and that will ensure a higher turnover,'' Khatua said. The value of commodities traded rose 24 percent to 11.2 trillion rupees in the quarter ended June, he said.
The commodity exchanges traded commodities worth $922 billion in the year to March, up 11 percent from a year earlier, Khatua said. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Domestic traders, producers and consuming companies are the main participants in India's commodity exchanges, compared with the 13 million people in the country who trade stocks. Overseas funds aren't allowed to buy and sell commodity futures.